Hampton Roads to move beyond JFCOM closing

Joint Forces Command crisis forges a bond among municipalities

Shock waves reverberated through Hampton Roads last August when Defense Secretary Robert Gates revealed plans to close the Norfolk-based U.S. Joint Forces Command. Coming just three years after the loss of 2,400 jobs with the shutdown of the Ford Norfolk Assembly plant, the announcement triggered anxiety among JFCOM’s nearly 4,000 local military and civilian workers and private contractors and spurred the region’s elected leadership into action.

In a region where cooperation is not always the quickest or easiest route, Hampton Roads officials set aside allegiance to their municipalities to focus on the region’s needs. They realized that shuttering the command would impact the entire area, not just Suffolk and Norfolk where JFCOM facilities are located. Joining forces with Virginia Gov. Bob McDonnell and the state’s congressional delegation, city councils and county boards of supervisors came up with strategies to preserve core functions associated with JFCOM while cushioning the blow to the local economy. Ultimately, the U.S. Department of Defense decided to leave about half of Joint Forces’ functions intact. JFCOM will lose about 2,000 employees, mostly contractors, by next March. All of its civil service employees will be reassigned to other commands.

Regional collaboration is credited with persuading federal officials to scale back plans for JFCOM, and local leaders believe that cooperation must continue for Hampton Roads to meet future challenges and opportunities. “What affects one of us affects all of us,” says Suffolk Mayor Linda Johnson. “When one city wins, we all win.”

While city and county officials work together more frequently than before, there is still room for improvement. “We’re doing better now than we were 20 years ago, but we have a long way to go,” observes James V. Koch, the Board of Visitors Professor of Economics and president emeritus of Old Dominion University. “There are lots of disagreements between cities and counties, and we aren’t necessarily united in the kinds of things we present in Richmond and Washington. We need to be thinking regionally.”

A regional mindset will help Hampton Roads better deal with a downsized JFCOM, which Koch says is expected to cost the area $300 million to $350 million annually in terms of gross regional product. That’s along the lines of what the region lost when the Ford truck plant closed. “Certainly, it’s not a death blow, but it’s not good, either,” Koch adds.

Gilbert Yochum, the newly named dean of ODU’s College of Business and Public Administration, agrees that downsizing JFCOM will not devastate Hampton Roads. Yochum, formerly director of the university’s Economic Forecasting Project, says JFCOM’s closure will have a relatively small impact on the region’s employment situation. “If you count the military, there are one million jobs in Hampton Roads,” he notes. “That’s not to say it’s not important. It’s something the region can deal with.” However, he adds that a larger problem looms with the continuous reallocation of resources, such as carrier movement and potential base closures. “The Hampton Roads economy has to grow in other areas to offset that.”

Currently, military and defense spending account for about 45 percent of the gross regional product. If an aircraft carrier task force and its support group left (as the Navy has proposed), the region would lose $900 million. “Defense spending is a powerful engine,” Koch notes. “Money was pumped into the region, and it made people a bit lazy. Now we have to attract firms that aren’t defense related but are connected to growing industries.”

The former Ford plant is set to play a major role in that endeavor. In March, Belgian logistics firm Katoen Natie NV purchased the plant’s main assembly building and 30 acres from Atlanta-based Jacoby Development Inc. to use as a distribution center for plastic pellets used in making plastics. Katoen Natie plans to hire about 225 workers over the next several years. Jacoby, which bought the plant and its approximately 100 acres from Ford, plans to use the remaining acreage to attract businesses involved in renewable energy.

Bringing new business to the former Ford plant will help the economy expand into different areas, says Norfolk Mayor Paul Fraim. “We see this as a great opportunity to grow the economy again and to diversify.”

That opportunity includes taking activities largely used in the military and translating them into private sector industries. For example, modeling and simulation (M&S), a strong component of JFCOM, has applications in areas such as health care, transportation, social sciences and game-based learning. Along with Orlando, Fla., and Huntsville, Ala., Hampton Roads is one of the leading M&S regions in the industry. ODU’s Virginia Modeling Analysis and Simulation Center works with more than 100 businesses, government agencies and academic institutions to develop and apply technologies throughout Hampton Roads. “You can apply modeling and simulation to other needs,” says Craig Quigley, executive director of the Hampton Roads Military and Federal Facilities Alliance. “You’re really only limited by your imagination.”

To develop and attract other new businesses, however, Hampton Roads must become more competitive in the marketplace. That’s where regional cooperation comes into play, says Dana Dickens, president and CEO of the Hampton Roads Partnership. Dickens leads a regional effort to build a more vibrant, sustainable economy. “Commerce knows no jurisdictional bounds,” he says. “If we want to keep the standard of living we’re accustomed to, we’re going to need to diversify. We can diversify together, but we can’t do it individually.”

Hampton Roads mayors realize their cities can’t go it alone, says Fraim. The mayors meet monthly, and Fraim believes they have developed a good working relationship. “Without questions, there’s been improvement,” he says. “Most of the enlightened leadership understands the unit of scale that competes best in the global economy is a regional unit, and we have to present ourselves in a unified fashion.”

In positioning the region as a global power, the Hampton Roads Partnership draws on the area’s collective strengths. Nearly two years ago, the group launched Vision Hampton Roads to promote the region as a place where people want to live, learn, work and start businesses. As the area’s first regional economic development strategy, Vision Hampton Roads is plotting a course for the region to attain global recognition. One of its main components, Innovate!Hampton Roads, strives to promote Hampton Roads’ innovation, intellectual and human capital, infrastructure and sense of place. “We want to promote Hampton Roads, including the name,” Dickens adds. “The idea is to figure out what ways to promote the assets of the region to our citizens as well as to folks outside the region.”

Hampton Roads Partnership also is working with business leaders to encourage displaced JFCOM workers to start small businesses. “There are a lot of really skilled people at JFCOM,” notes Quigley. “These are well-educated people with a strong work ethic, and we don’t want to lose them from Hampton Roads.”

Municipalities already have begun to look at diversifying. “In Norfolk when you take defense spending and the port out of the equation, no one sector of the economy represents over 15 percent of the overall economy,” Fraim notes. “We’ve had discussions about expanding and diversifying the economic base so we can maintain a lower tax rate.”

Across the Elizabeth River, recently elected Portsmouth Mayor Kenny Wright is doing his best to promote regionalism. “We lost a lot in the past to other regions that have been more regionalized,” Wright says. “It’s good that we’re having these conversations and finally looking at things as a whole.” He adds that innovation also will be crucial. “We can’t continue to think military dollars are the only thing that’s going to keep us afloat.”

Suffolk has been developing new industries for the past decade, emphasizing health care, manufacturing, distribution and warehouses, and food processing, as well as modeling and simulation. “JFCOM and the military were very strong in helping create a nexus for us with modeling and simulation,” Johnson adds. “That’s going to be a huge piece of our future.”
While civic and business leaders agree that diversity will ultimately strengthen Hampton Roads, Quigley of the Military and Federal Facilities Alliance does not want to see defense business fall by the wayside. His group is dedicated to growing and preserving federal resources in the region.“If we really want to grow Hampton Roads’ economy, we have to continue to grow the federal sector and grow the private sector,” he says.

Michael Barrett, CEO of the Runnymede Corp., agrees with that approach. He wants to see both military and private industry grow. “We need to get as many military and federal facilities as we can,” he says. “We also ought to be recruiting as many private corporations as we can, and the ratio between the two will sort itself out.”

Barrett would like to see another military entity make Hampton Roads its home. “We’re in a strong position to be competitive for other military commands,” he says. “If there’s any lesson we need to learn from JFCOM, it’s that there will be a gain and loss of federal facilities, and we need to be in the gain.”

That could happen within the year. Quigley says there’s a good chance that the U.S. Africa Command will come to Hampton Roads. Now temporarily housed in Stuttgart, Germany, the command’s 1,500 employees could move into space vacated by JFCOM. “We have so many attributes in the community that make it a smart move,” he says. “As JFCOM’s presence diminishes, we could move in the Africa command right behind it. It’s not perfect, but it’s close.” Congress is expected to decide on the command’s relocation sometime this year.
With Hampton Roads’ location on the Atlantic seaboard, moderate weather, relative low cost of living and deep-water port, Barrett believes the region is in a strong position to compete for both civilian and military business. “Every time a door closes, another door opens,” he says. “Our strengths for private economic development and for gaining federal facilities are great.”